“If future generations are to remember us more with gratitude than sorrow, we must achieve more than just the miracles of technology. We must also leave them a glimpse of the world as it was created, not just as it looked when we got through with it.”
Lyndon B. Johnson
This table of stock market price performance over the past five years speaks volumes about how life is changing. Everyday fortunes are made and lost on the market, but it’s the human stories behind this transformation of the way we do things that matter.
There are two great driving forces behind these changes - the takeover by the digital economy, and climate change. In both areas, but particularly the first, the virus emergency has accelerated the change. As we sped through the awful milestones of half a million dead and ten million infected this last weekend, and as the word ‘rampant’ is now the only way to describe the virus’s spread in the United States and Brazil, it’s clear that the acceleration of change will continue.
So in this commentary we consider the extent of popular support for these two driving forces, and what the contrast between them says of our care for future generations.
Revolutions do not have to be violent, but they do imply dramatic and sudden change. It is appropriate to talk of both the digital revolution and the green revolution in this way.
The digital revolution is like the Industrial Revolution: it’s happening because people want it in their lives today, and business is willingly rising to that challenge and delivering the change. It is a popular movement for change which is killing big retail - such as, just last week, Intu - and forming wholesale changes in business models in the world of work. Government doesn’t need to encourage it or legislate to make it possible - in fact, it’s all they can do to keep pace with regulating the new environment. Meanwhile, those who care about the longer-term impact, including the way in which we’re ceding wealth and influence in vast quantities to the unelected few, must continuously argue for these longer term concerns.
Climate change is very different. Of course, it does have its cheerleaders on the streets, such as Greta Thunberg; but the ground swell movement requiring change is nothing compared to our embrace of technology. Why else is the number of electric cars sold so small, and why else do people still heat their houses with oil and gas?
The fact is that climate change is all about the long term: it means taking short-term pain in terms of expense and investment in order to reap long-term gains. That’s why the need to drive alternative energy generation costs below those of fossil fuels is so important, in order to provide the short-term upside which will make the majority of people change their ways.
When Government legislates for a greener economy, it does so in recognition of its longer term responsibilities, irrespective of the short-termist nature of the majority of the electorate.
The sad fact is that we humans apply a heavy discount to the significance we place on the future. The truth is that we do not care nearly as much about the conditions that our children and grandchildren will inhabit as we do about our life in the present. We may try to deny it but in our hearts we know it’s true, and all the while the sheer pace of change presents a problem in itself, as we commented on 12 March 2018.
The stock market, however, is one step ahead of our base instincts - because share prices are driven by anticipation of the future, not just by current demand and supply in the present. That’s why the share prices of tech giants and clean energy businesses like Tesla have done so well, and why the giants of the past have seen their market valuations shattered.
The stock market sees when the oil tankers start to change direction, and it gets one step ahead of the game. So, while the unemployment agony of retail and fossil fuels is largely yet to come, investors are already lining up behind the forces of tomorrow. It’s a strong motive for being a personal investor, especially when cash deposits earn nothing in interest in bank accounts.
But we do need another revolution in share issuance and corporate governance, in order to ensure that ordinary people can participate in these changes and feel a sense of ownership in them. I long for the day when, for example, a company such as Zoom Video Communications Inc. sets up a system to introduce share ownership for its millions of new 'virus emergency' personal customers. It would be strongly in their interest to do so, to fend off both the challenges of competition and the potential moves away from virtual meetings when the vaccine is eventually found, and we can meet in person again.
And, as companies recapitalise in the wake of the economic ravages of the virus, it is seriously important that institutional intermediation does not dilute the extent of direct personal investor shareholdings. This means that we must take an intelligent approach to pre-emption rights, recognising that, for personal investors, ‘old money’ does not necessarily own the ‘new money’ needed for recapitalisation, unlike institutional investment.
HM Treasury, BEIS and the Law Commission need to work together in a new initiative to promote the interests of ordinary people, co-operating with personal investment organisations and their trade associations in order to ensure that people are not forgotten in the rush for new money.
It’s by making changes like this that we can ensure that future generations can benefit in the long term, and will not hold their ancestors from the current age responsible for discounting their interests so heavily.
Gavin Oldham OBE